On October 11, 2019, in remarks to the press, President Donald Trump announced that the United States and China’s trade negotiators had “agreed in principle” to address issues involving intellectual property, financial services and agricultural sales between the two countries. In this “phase one” agreement, China agreed to purchase between $40 billion to $50 billion in U.S. agricultural products, and the United States agreed to cancel a 5 percent increase in Section 301 tariffs on imports of Chinese products set to be implemented on October 15, 2019.

In addition to China’s purchase of agricultural goods, U.S. Trade Representative (USTR) Robert Lighthizer indicated that the agreement addresses sanitary-phytosanitary and other biotechnology issues that should make it easier for China’s importation of U.S. farm products. Secretary of the Treasury Stephen Mnuchin noted that there have been extensive discussions on the opening of China’s market to U.S. financial services firms as well as discussions with Governor Yi Gang, chairman of the People’s Bank of China, regarding currency issues and transparency on the foreign exchange markets. Regarding technology transfer, Trump stated that it will be addressed both in phase one and phase two of any overall trade agreement.

In reaching this partial trade agreement, the president agreed to suspend plans to raise tariffs beginning October 15, 2019, on $250 billion worth of Chinese goods from 25 percent to 30 percent see Trump and Trade Update of August 26, 2019). Lighthizer also confirmed that the increase in List/Tranche 4 tariffs on approximately $300 billion worth of imports from China set for December 15, 2019, remains subject to Trump’s final decision later in the year. He further added that this phase of the agreement does not address issues and U.S. concerns regarding Huawei Technologies Co., Ltd. and its placement on the U.S. Entity List, which has severely restricted U.S. dealings with the company (see Trump and Trade Updates dated May 17, 2019 and August 19, 2019).

The USTR has indicated that it could take up to five weeks to draft the final language for phase one of this agreement. Trump stated that he will meet with Chinese President Xi Jinping at the Asia Pacific Economic Cooperation Summit in November 2019 to sign it, which will be followed by negotiations on phase two. No text of these negotiations or the draft agreement have been made available yet. Many members of Congress publicly supported this development but reserved further comment until details of phase one were made available by the USTR. Several Chinese officials also commented that the phase one agreement has not been finalized, and continued negotiations on its terms remain pending.